Crude Oil Futures Rise to 30-Month High on Fighting in Libya.
For reference, Libya produces 2% of the world’s oil.
This tells you that the oil market is highly unstable and that there is no competition.
Solar is now cheaper than oil and nuclear. Hmmm.
Oil futures rose to the highest
level in more than 30 months as Libyan rebels fought loyalists
at an oil port, adding to concern that protracted conflict in
the Middle East and North Africa will curtail supply.
Oil gained 0.5 percent as fighting centered around Brega, a
Mediterranean seaport. Yemeni police clashed with anti-
government protesters in the southwestern city of Taiz, Sadek al
Shujaa, chief of a local clinic, said in a telephone interview.
“The trend continues to be up, and the market continues to
be led by all the events in the Middle East,” said Tom Bentz, a
broker with BNP Paribas Commodity Futures Inc. in New York.
“There are more worries about Middle East crude.”
Crude for May delivery advanced 53 cents to $108.47 a
barrel on the New York Mercantile Exchange, the highest
settlement level since Sept. 22, 2008. Prices are up 28 percent
from a year ago.
Brent oil for May settlement climbed $2.36, or 2 percent,
to $121.06 a barrel on the London-based ICE Futures Europe
The European benchmark traded at a premium of $12.59 a
barrel to U.S. futures. The difference between front-month
contracts in London and New York surged to a record $19.54 on
Feb. 21 as unrest spread in the Middle East and North Africa and
stockpiles climbed at Cushing, Oklahoma, the delivery point for
New York futures. The spread averaged 76 cents last year.
Italy rejected a reported cease-fire proposal by Qaddafi
and said it would recognize the opposition as the legitimate
government, following a similar move by France.
“It’s becoming increasingly clear that the situation in
Libya may be prolonged,” said Christopher Bellew, senior broker
at Bache Commodities Ltd. in London. “The more one looks at
uprisings in the Middle East, the more one realizes they will
not be easy to resolve.”
At least 15 demonstrators are dead and hundreds are injured
in the clash in Yemen, according to Shujaa. Protesters are
demanding an end to the 32-year rule of President Ali Abdullah Saleh.
Wave of Uprisings
The strife in Libya and Yemen is the latest in a wave of
uprisings that has toppled the leaders of Tunisia and Egypt and
spread to Algeria, Bahrain, Oman and Syria. Oil prices have
climbed 18 percent since the ouster of Tunisian President Zine El Abidine Ben Ali on Jan. 14.
An estimated 3.2 million barrels a day of oil passed
through Bab al Mandab in 2009, according to the Energy
Department. A disruption to the strait between Yemen on the east
and Djibouti and Eritrea on the west may prevent tankers from
the Persian Gulf and Gulf of Aden from reaching the Suez Canal
and the Mediterranean Sea.
Royal Dutch Shell Plc and Total SA halted oil production at
fields in Gabon and Tullow Oil Plc’s output is “severely
disrupted” because of a workers’ strike.
Crude fell earlier as the New York Times reported at least
two of Muammar Qaddafi’s sons are seeking his ouster.
Qaddafi’s sons are proposing pushing their father aside to
transition to a constitutional democracy under the direction of
his son Saif al-Islam Qaddafi, the Times reported, citing a
diplomat and a Libyan official briefed on the plan.
Prices are tempered by “the talk that Qaddafi’s son and
others are trying to arrange exit strategies there,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge
fund that focuses on energy. “If that situation calms down,
then we’ll see several dollars come off the price.”
A person close to Qaddafi’s sons Saif and Saadi said the
father appeared to be willing to go along with his sons’
transition plan, the Times reported. Ali al-Essawi, a rebel
representative, said in Rome today that it was unacceptable to
replace Qaddafi with one of his sons.
Long Position Rises
Net-long positions in oil held by hedge funds and other
large speculators increased by 1.8 percent, to 292,066 in the
seven days ended March 29, the Commodity Futures Trading
Commission’s weekly Commitments of Traders report released at
the end of last week.
Oil volume in electronic trading on the Nymex was 407,375
contracts as of 4:25 p.m. in New York. Volume totaled 554,646
contracts April 1, 32 percent below the average of the past
three months. Open interest was 1.55 million contracts.
To contact the reporter on this story:
Margot Habiby in Dallas at firstname.lastname@example.org.